Artificial intelligence (AI) is rapidly evolving and offers an exciting investment opportunity. With the launch of ChatGPT, a chatbot technology that can simulate human-like understanding and generate conversational responses, AI has reached a commercial tipping point. Developed by OpenAI with a more than $10 billion investment from Microsoft, ChatGPT has already been used to write short stories, academic papers, create music, and videos.
Investors are wondering about the impact of AI on the economy and the investment opportunities it presents. AI is already being applied across the economy in many ways, but large language models like ChatGPT are just one example. The rise of hyper-scale pattern recognition and chatbots built on large language models has been phenomenal. Nevertheless, it is critical for investors to separate the reality from the hype and understand where value can accrue in the chain.
Robots and AI-powered devices
AI is expected to have a more significant impact in the next handful of years, with robots and AI-powered devices playing a primary role. For instance, Amazon has been deploying a robot called Sparrow. In 2015, the winner of Amazon's competition to design a picking robot picked up 10 of 12 items at a rate of two minutes per successful pick. Seven years later, Sparrow can pick out roughly two-thirds of the more than 100 million items in an Amazon warehouse at a rate of just seconds per pick. This may help Amazon address its current high operating costs.
Self-driving cars and trucks have also been gaining real-world traction, with Waymo One and Waymo Driver, the driverless car services of Google parent Alphabet, and General Motors’ Cruise, are robo-taxiing passengers in Phoenix and San Francisco. They plan to launch taxis in more cities and add thousands of self-driving vehicles to their operations over the next several quarters.
The use of drones to make deliveries is another example. Alphabet’s Wing has delivered more than 300,000 packages in test markets in Australia, Finland, Ireland, and Texas. Amazon has also been testing drones in Texas and California. The company hopes to deliver 500 million packages annually utilizing the technology by the end of the decade. Google's RT-1 is a one-armed robot that can perform more than 700 tasks with a high success rate.
The wider use of robots, along with the massive computing power required for broader uses of AI, will likely be a major tailwind for the semiconductor industry and cloud services.
AI in healthcare
AI is also playing an increasingly significant role in the healthcare industry. AI-powered software is being used to analyze X-rays, MRIs, or CT scans to help radiologists improve the accuracy rate of their diagnoses. German industrial conglomerate Siemens has developed tools for its imaging machines that apply inference modeling to better identify irregularities in a scan. AI-assisted analysis is also being integrated into the field of pathology where pathologists diagnose cancer by looking at tissue under a microscope.
AI can augment the ability to detect cancer by assisting researchers with genomic analysis. It has the potential to become a standard of care in many of these applications within the next decade.
In conclusion, AI is evolving fast, and investors need to keep an eye on its many applications to identify investment opportunities. Robotics and AI-powered devices are expected to have a more significant impact in the next few years. Healthcare is another significant field where AI is already making a big impact, and we can expect this to continue. As always, it is essential to separate the reality from the hype to identify investment opportunities that will translate into returns.
